Faulconer’s $1B claim is flawed

Regardless of how much Proposition B lowers the annual pension payment for the city, it’s misleading to tell voters that the initiative provides “a billion dollars that we can now put back into our community” as Faulconer says in a campaign mailer. The March 2012 projections didn’t have the city saving any money until fiscal 2017 because closing the pension system to most new hires forces the city to pay off its deficit faster with larger payments upfront. There are also additional costs to provide a 401(k)-style plan and death and disability payments.

If that holds true, Faulconer wouldn’t be able to use any of those savings until after he is potentially re-elected in 2016. The money certainly isn’t there now to be spent.

The nearly $1 billion in projected savings is just that — a projection based on the information available at that time. It does provide a reference point for Faulconer’s claim that he helped save a billion dollars. The true impact of Proposition B, however, won’t be known for decades although it’s safe to assume it will save taxpayers hundreds of millions of dollars in the long run.

“I’m proud to have co-authored the pension reform measure that will save San Diego taxpayers $1 billion,” Faulconer said in response to questions for this story. “It’s a significant amount that’s important to talk about because the next mayor will decide how a lot of it is spent. My opponents would spend the savings on excessive, across-the-board City Hall pay raises that divert tax dollars away from our neighborhoods. I’ll spend it on improving our roads, parks, libraries and other neighborhood services that all San Diegans deserve.”

Besides Faulconer, the only other mayoral candidate who is talking about pensions is former City Attorney Mike Aguirre. He has criticized Faulconer and Sanders for saying $1 billion is available to spend. He calls the claim “false because it is materially misleading.”

“Projecting to save is a materially different concept than ‘saving a billion dollars we can now put back into our communities.’” Aguirre said. “While less money may be needed for the pension, the fact remains pension costs are projected to rise.”

The pension system projects that after the initial impact of the pay freeze the city’s annual payment will steadily increase to $292 million by 2025 before it begins to recede.

Faulconer supported Proposition B and City Councilman David Alvarez, one of his mayoral rivals, opposed it. Qualcomm executive Nathan Fletcher, who is also running for mayor, supported Proposition B but in a recent labor questionnaire said he supported pensions for public employees. He has since said Proposition B is a settled issue.